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Identify the effect of increase in tax rates on either
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- Solve for the maximum amount of revenue the government can raise from this tax. Hint: the tax rate will be a fraction between 0 and 1. In general, what explains the shape of the Laffer curve?The Laffer curve suggests A.there is some maximum amount of tax revenue that the government can collect from taxing income. B.the optimal tax rate leads to the highest amount of tax revenue. C.the optimal tax rate on labor income is 0% D.an increase in tax rates leads to an increase in labor supply.Describe the three distinct terms to describe the tax rates?
- TRUE/FALSE Barro is considered to be a supply side economist which is consistent with his idea that we should eliminate the corporate income tax.If the goverment wants to raise tax revenue and shift most of the tax burden to the consumers, it wouldimpose a tax on a good with a:a) flat (elastic) demand curve and a steep (inelastic) supply curve. b) steep (inelastic) demand curve and a flat (elastic) supply curve. c) steep (inelastic) demand curve and steep (inelastic) supply curve. d) flat (elastic) demand curve and a flat (elastic) supply curve.Most economists have reached the following conclusion about supply-side economics.a. None of these.b. Supply-side tax cuts are likely to reduce income inequality.c. Supply-side tax cuts are almost certain to lead to smaller budget deficits. d. Supply-side tax cuts are likely to widen income inequality. Give explanation for answer
- whenever the government wants to increase revenues it usually trend to increase taxes on goods that have inelastic demand than elastic demand.Why, explain using examplesIs supply-side policies have been successful in improving theperformance of an economy regarding taxation.If a tax is imposed on a market with inelastic supply, how is the burden of the tax distributed? Question 17Answer a. Sellers will bear most of the burden of the tax if the demand is elastic. b. Buyers will bear most of the burden of the tax if the demand is inelastic. c. Buyers will bear most of the burden of the tax if the demand is elastic. d. Sellers will bear most of the burden of the tax if the demand is inelastic.
- Miller wants to discourage energy drink purchase, so he's considering a $1 tax or $2 tax on the drink. 1. Is Sen. Miller's plan for a two dollar tax better at stopping consumers from purchasing energy drinks? Why or why not? Incorporate your knowledge of the Laffer Curve in your response.President Clinton has seized the cigarette excise tax as an expedient and politically correct means of increaseing federal revenue. In 1994 the federal government took in $12 billion from the present 24-cents-per-pack tax. If the tax were quadrupled to $1 a pack, Clinton figures tax revenues would increase by more than $50 billion over three years. Those added revenues would help finance the heath care reforms the president so dearly wants. Professor Gary Becker, a Nobel Prize-winning economist at the University of Chicago,says Clinton math is wrong. The White House assumed that cigarettes sales would drop by 4 percent for every 10 percent increase in prices, not the full adjustment of smokers' behavior. Over a three-year period, cigarette consumption is likely to decline by 8 percent for every 10 percent increase in price-twice as much as Clinton assumed.As a result,the $1-a-pack tax will bring in much less revenue than President Clinton projected. According to Professor Becker, by…Reagan campaigned for a phased 30 percent tax cut within the next three years in officeMost of the tax cuts focused on the lower -income and poverty levels . True or False?
